Developing a healthy corporate culture has become an area of focus for many small business owners, startup founders, and corporate CEOs. But, for many, the term “corporate culture” evokes bureaucracy, conformity, and false enthusiasm for work.
If you’re starting a business, the question isn’t whether you’ll have a corporate culture, but what that corporate culture will look like. With the proper care and attention, culture is an asset that benefits your workers, drives growth, and improves your bottom line.
What is corporate culture?
Corporate culture refers to the shared values, attitudes, and practices that define and guide a company’s operations. Think of it as a brand’s personality: It encompasses how employees interact with each other, with customers, and with other stakeholders.
Corporate culture can be a factor in a company’s success. A strong and positive corporate culture helps workers feel more secure, allowing them to identify their career success with the success of the company. According to PwC’s 2021 Global Culture Survey, business leaders whose company has a distinctive culture were 80% more likely to report employee satisfaction than those at companies without a distinctive culture.
Types of corporate culture
Two University of Michigan academics, Kim S. Cameron and Robert E. Quinn, developed the Competing Values Framework in their 1999 book, Diagnosing and Changing Organizational Culture. It breaks down corporate culture into four general types, each representing a different configuration of company values, business environment, and general workplace culture.
Here’s a brief overview of these four types of corporate culture:
1. Hierarchy
A hierarchical corporate culture favors stability over flexibility. In a hierarchical culture, order and efficiency are the core values. The business structure favors clearly defined responsibilities and duties, and it relies on top-down leadership. Employees follow well-known rules and formal procedures. They likely report to one manager, who reports to their own manager—on up to the CEO at the top of the pyramid.
Hierarchy culture tends to focus on long-term goals, such as growing to be a dominant player in a particular industry. Standardization and systemization are key. This can allow for advances in efficiency, which helps ensure low costs and reliable performance. Historically, many large corporations have been hierarchical. On the flip side, hierarchical cultures can stifle the creativity of individual employees, possibly limiting innovation.
Ford Motor Company, one of the most successful and transformational corporations in history, is a good example of a hierarchical corporate culture. Henry Ford, the founder of the company, made most major decisions, which then trickled down the chain of command through layers of management. Assembly lines in Ford factories allowed for maximum efficiency, with each worker’s role precisely defined.
2. Market
Market culture is all about competition, as its name implies. Productive employees get ahead by performing better than their coworkers, and the leadership team recognizes employees who produce results.
In a market culture, getting it done is more important than how it gets done. This type of culture is often demanding and fast-paced, and performance expectations can be stressful for some workers. On the other hand, some employees may find these conditions exhilarating and thrive.
Many companies in the financial sector, such as hedge funds and private equity firms, have market cultures. Employees are encouraged to be competitive and agile, with a sink-or-swim approach to success in the company. Their compensation often reflects this; performance-based year-end bonuses are a big part of their pay. Similarly, Netflix relies on a market culture where employees are encouraged to make decisions, and only the most effective workers are kept.
3. Adhocracy
An adhocracy culture emphasizes flexibility. Some adhocracy companies have an open management philosophy, meaning job titles aren’t rigidly defined, and the leadership team can encourage team members to take initiative and think outside the box. Adhocracy cultures foster highly engaged employees and market-changing new ideas.
However, this type of corporate culture can also lead to a business that is unfocused and inefficient. Adhocracy works best when applied to small or medium teams working on specific projects within a larger organization.
Spotify, the biggest music streaming service in the world, is an example of adhocracy culture. Spotify’s engineers are divided into small, eight-person teams called squads, the leadership of which is decided upon by the members. These small groups allow for agility and flexibility while remaining aligned with the overall task of growing subscribers and improving user experience.
4. Clan
Clan culture is cohesive, caring, and close-knit. In organizations with this type of culture, communication tends to be informal, and relationships between employees are prioritized. Often, these companies have a deep collaboration culture, which can lead to a sense of mutual respect and trust.
Unlike hierarchical cultures, where directives are handed down, clan cultures may require buy-in or consensus from all shareholders when making decisions. This can ensure employees feel invested in their work, but can dramatically slow the process of adapting to change.
In a clan company, managers often mentor their direct reports, focusing not only on success in the marketplace but on employees’ professional growth. Clan corporate cultures ensure employees feel supported and empowered to make positive decisions for themselves and the company. Tom’s of Maine, a certified B Corp, is known for having a clan culture, where care extends to workers, customers, and the environment. Tom’s provides paid volunteer time, ongoing job- and life-skills training, a policy for internal promotions, and reimbursement for continued education costs.
How to foster a healthy corporate culture
As your business grows, pay attention to your corporate culture. While there’s no one-size-fits-all formula for creating a positive company culture, some tendencies can guide you in the right direction.
Here are the four steps involved in creating a strong company culture:
1. Define your company’s values
Your cultural values are an extension of your brand. They often follow naturally from the company vision you develop as you start your business: who you aim to serve, how you want to be seen, and what you hope to accomplish. For example, if creativity and acceptance are important to your company, an adhocracy culture might be a natural expression of those values. If your goal is to produce consumer goods as efficiently and cheaply as possible, a hierarchy culture likely makes sense.
As you assess your values, ask yourself these questions: How do you believe people do their best work? Do you want to be known as a company that moves fast and breaks things or a steadfast purveyor of trusted quality? Are you seeking to create a fast-paced, competitive environment or to take a more supportive approach that fosters teamwork and professional growth?
These considerations can help shape your company’s core values, which, in turn, influence your corporate culture.
2. Lay the groundwork
As your company grows, you may want to formalize your company culture to make communication and accountability easier and more transparent. One way to do this is by creating a company culture deck you share with employees and include in training for new hires. This deck can provide a history of the company and its founding values and goals, as well as specifics about how the workplace culture manifests in interpersonal relationships.
Another part of laying the groundwork is modeling the culture yourself. As a business owner, your company culture starts with you. Remember, it’s your responsibility to be a role model for a positive corporate culture. Look for ways to mentor your direct reports, and encourage them to share their wisdom and institutional knowledge with their own teams. This will help your desired culture take root organically.
3. Ask for feedback
Implement mechanisms for employees to give feedback on their experience of the company culture. For example, if your company has a clan culture, you might ask employees if they feel mentored, sufficiently included, and cared for.
Feedback can come in the form of anonymous surveys, informal discussions, or company-wide meetings, depending on the type of corporate culture you’ve chosen. This can provide valuable information about how your corporate culture is developing and how your employees feel about it. Once you’ve received feedback from your employees, you can adjust work processes to ensure you have a strong corporate culture.
4. Grow with your company
As your company grows, its culture will invariably change too. For instance, an intimate, highly open, and collaborative corporate culture might need to become more streamlined and efficient as a company gets bigger and more complex. Don’t be afraid to change when you see the need for it, and remember to be patient. Cultures can take time to develop and evolve. By being open to change, you’ll be better equipped to guide your company to financial success.
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Corporate culture FAQ
What’s an example of corporate culture?
Today, some of the most prominent examples of corporate culture exist in modern technology firms, such as Apple. Apple is known for offering extensive job training and actively seeking employee feedback. This kind of positive company culture leads to high employee retention rates and positive corporate reputations, both for workers and customers.
Can a small business have a corporate culture?
Yes, all of the features you could want for a good company culture can be implemented on a small scale.
What makes for a good corporate culture?
Features of a great company culture include the professional growth of the employees, a collaborative work environment, leadership that recognizes workers and their needs, and a sense of common purpose.
